Big problems appear to be getting worse for Cassava Sciences (NASDAQ:SAVA). The clinical-stage biotech company is a former favorite among retail investors. But last week, SAVA stock plunged on news of alleged misconduct.
Previously, the City University of New York (CUNY) had conducted an investigation into faculty researcher Hoau-Yan Wang. These efforts led to allegations that the Cassava collaborator had engaged in “egregious misconduct,” including image manipulation, as detailed in an article published by Science.
Since then, shares of SAVA stock have been falling as the company’s behind-the-scenes operations are called into question. The CUNY report on Wang’s alleged misconduct came from an anonymous source who did not have the authority to share it.
Does this mean investors should approach Cassava with skepticism as further details on the allegations come to light? Let’s take a closer look.
What’s Happening With SAVA Stock?
Today has been a bad day for SAVA stock, following an even worse week. Indeed, shares have been in a race to the bottom all day, closing down by about 15%. Shares are also down more than 30% for the week. That’s hardly an encouraging trajectory. Cassava’s troubles didn’t start with the recent allegations, either; SAVA has shed almost 50% over the past six months.
That said, if the investigation’s findings are revealed to be true, it could lead to more difficult days ahead for SAVA stock. Specifically, the allegations center around simufilam, Cassava’s Alzheimer’s treatment. As The Wall Street Journal reports:
“The university investigation also found ‘evidence highly suggestive of deliberate scientific misconduct’ by Hoau-Yan Wang, a medical professor at the CUNY School of Medicine at the City College of New York. He co-wrote multiple journal articles with Cassava supporting the promise of its experimental Alzheimer’s drug called Simufilam.”
WSJ reviewed the CUNY investigation’s findings and also noted that Wang failed to provide the investigation “primary data from experiments or research notebooks that would show how he and other authors arrived at the conclusions in their journal articles.” However, Wang denies that the investigation provides conclusive evidence of data manipulation.
All the same, everything related to the allegations so far casts significant uncertainty over Cassava’s work. Of course, SAVA wasn’t doing so well before news of the investigation broke. But now investors are more likely than ever to run the other way when it comes to this stock.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
